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Faust Article: Listened to Constituents in Voting for Tax Bill

Tuesday, May 5th, 2009 at 6:16 am

(Article by Rep. Tim Faust)

From the hundreds of conversations, e-mails and survey responses I have received this session about the budget, the majority of the people of our district agree on three principles. First, cut wasteful government spending, corporate tax loopholes and programs that aren’t efficient. Second, preserve core services like education, hospitals, nursing homes and public safety. Third, don’t push our current budget troubles onto future generations with more debt. I applied these principles to the House, Senate and Governor’s budget proposals and decided the House budget was by far the best option.

The House budget proposal includes $1.6 billion in cuts, about $100 million more than the Governor is proposing. The cuts are targeted in order to hold education funding flat, cut state government by the largest percentage, and limit cuts to hospitals nursing homes and public safety. In order to prevent catastrophic cuts, the plan raises $1.5 billion in revenue through reforms to our tax structure that make it more fair.

Especially given the economic times, it was difficult to vote for any tax increases. But in looking at the other budget options and considering the level of cuts we would have to make without new revenue, the responsible vote was for a plan that cuts spending, protects basic services and raises reasonable revenue.

According to a recent Tax Incidence Study, Minnesotans who earn less than $113,000 pay about 12% of their income in state and local taxes. The highest earners, $447,000 and more, pay just 8.8%. The House Tax Bill addresses this disparity by creating a new 9%, 4th bracket for wage earners making over $300,000 per year and closes corporate tax loopholes and tax breaks that go to the highest wage earners. Our plan also includes a slight tax increase on cigarettes and alcohol, both which were supported by over 80% of constituents who responded to my survey.

The Governor’s budget proposal helps show why reasonable revenue is needed to responsibly close our budget shortfall. Without it, we will be forced to make devastating cuts. The Governor would cut $1.5 billion, hitting hospitals and nursing homes the hardest. The deep level of cuts to hospitals included in the Governor’s budget, (10 times the level of cuts proposed by the House) would close rural hospitals and nursing homes and trigger the loss of thousands of jobs. Even with those deep cuts, the Governor’s calls for $1 billion in new revenue through a borrowing scheme that would ask Minnesotans to pay of our current deficit for the next twenty years, plus an additional $600 million in interest. There is wide bipartisan disagreement with this revenue proposal, which was voted down on the House floor last week on a vote of 131 – 2.

In the absence of new revenue, the Legislature will have to cut government spending by about $3 billion. In other words, we won’t be deciding whether to take the House budget cuts or the Governor’s budget cuts – we will have to take the House budget cuts on top of the Governor’s budget cuts. The fact is a cut at this level will close rural hospitals and nursing homes for good, cut education funding, dramatically increase property taxes and trigger the loss of tens of thousands of jobs.

We are at critical juncture in the history of our state. If we balance our budget deficit with only deep spending cuts, we will set Minnesota back for years to come. If we balance the budget by piling up debt for future generations, we only create larger problems down the road. The most responsible plan to balance the budget is to pursue a balanced mix of spending cuts and reasonable revenue that solves our budget deficit today, while preserving the vital services so important to our successful future.